UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 15, 2010
Date of Report
(Date of earliest event reported)

GENWORTH FINANCIAL, INC.
(Exact name of registrant as specified in its charter)

 
					
Delaware	 	001-32195	 	33-1073076	
(State or other jurisdiction of
incorporation or organization)	 	(Commission
File Number)	 	(I.R.S. Employer
Identification No.)	
		
6620 West Broad Street, Richmond, VA	 	23230	
(Address of principal executive offices)	 	(Zip Code)	
(804) 281-6000
(Registrant’s telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
 
¨	 	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
¨	 	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
¨	 	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
¨	 	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

 
Item 2.02 Results of Operations and Financial Condition.
The condensed consolidated financial statements of Genworth Financial Mortgage Insurance Pty Limited, an indirect subsidiary of Genworth Financial, Inc., as of September 30, 2010 and December 31, 2009, and for the three and nine months ended September 30, 2010 and 2009, are included in Exhibit 99.1 to Item 9.01 of this Current Report on Form 8-K.
The information contained in this Current Report on Form 8-K (including the exhibit) is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as otherwise expressly stated in such filing. This information may be included or incorporated by reference in registration statements or reports filed under the Securities Act, or the Exchange Act, in connection with the issuance of asset-backed securities by one or more third parties.
Item 9.01 Financial Statements and Exhibits.
The following material is furnished as an exhibit to this Current Report on Form 8-K:

Exhibit
Number	  	Description of Exhibit	
99.1	  	Genworth Financial Mortgage Insurance Pty Limited Condensed Consolidated Financial Statements as of September 30, 2010 and December 31, 2009 and for the three and nine months ended September 30, 2010 and 2009.	
 
2

 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	 	GENWORTH FINANCIAL, INC.	
			
DATE: November 15, 2010	 	By:	 	/s/ Amy R. Corbin	
	 		 	Amy R. Corbin	
	 		 	Vice President and Controller	
	 		 	(Principal Accounting Officer)	
 
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Exhibit 99.1
 Index to Condensed Consolidated Financial Statements
Genworth Financial Mortgage Insurance Pty Limited

 	  	Page	 	
Financial Statements:	  				
Condensed Consolidated Statements of Income for the three and nine months ended September  30, 2010 and 2009 (Unaudited)	  	 	2	  	
Condensed Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and December  31, 2009	  	 	3	  	
Condensed Consolidated Statements of Changes in Stockholder’s Equity for the nine months ended September 30, 2010 and 2009 (Unaudited)	  	 	4	  	
Condensed Consolidated Statements of Cash Flows for the nine months ended September  30, 2010 and 2009 (Unaudited)	  	 	5	  	
 
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 Genworth Financial Mortgage Insurance Pty Limited
Condensed Consolidated Statements of Income
(U.S. dollar amounts in thousands)
(Unaudited)
The unaudited interim financial information has not been reviewed by an independent registered
public accounting firm.

 	  	Three months ended September 30,	 	 	Nine months ended September 30,	 	
 	  	2010	 	  	2009	 	 	2010	 	  	2009	 	
Revenues:	  				  				 				  				
Premiums	  	$	74,365	  	  	$	77,360	  	 	$	240,405	  	  	$	215,676	  	
Net investment income	  	 	37,532	  	  	 	33,713	  	 	 	112,301	  	  	 	88,740	  	
Net investment gains (losses)	  	 	231	  	  	 	(1,279	) 	 	 	505	  	  	 	1,687	  	
Other income	  	 	718	  	  	 	509	  	 	 	1,578	  	  	 	919	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total revenues	  	 	112,846	  	  	 	110,303	  	 	 	354,789	  	  	 	307,022	  	

Losses and expenses:	  				  				 				  				
Net losses and loss adjustment expenses	  	 	29,272	  	  	 	35,675	  	 	 	101,954	  	  	 	115,253	  	
Acquisition and operating expenses, net of deferrals	  	 	16,236	  	  	 	13,927	  	 	 	46,637	  	  	 	37,793	  	
Amortization of deferred acquisition costs and intangibles	  	 	8,613	  	  	 	6,046	  	 	 	27,069	  	  	 	17,766	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total losses and expenses	  	 	54,121	  	  	 	55,648	  	 	 	175,660	  	  	 	170,812	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Income before income taxes	  	 	58,725	  	  	 	54,655	  	 	 	179,129	  	  	 	136,210	  	
Provision for income taxes	  	 	18,711	  	  	 	18,073	  	 	 	56,521	  	  	 	45,577	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Net income	  	$	40,014	  	  	$	36,582	  	 	$	122,608	  	  	$	90,633	  	

Supplemental disclosures:	  				  				 				  				
Total other-than-temporary impairments	  	$	—  	  	  	$	—  	  	 	$	—  	  	  	$	—  	  	
Portion of other-than-temporary impairments included in other comprehensive income (loss)	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Net other-than-temporary impairments	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	
Other investment gains (losses)	  	 	231	  	  	 	(1,279	) 	 	 	505	  	  	 	1,687	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total net investment gains (losses)	  	$	231	  	  	$	(1,279	) 	 	$	505	  	  	$	1,687	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
See Notes to Condensed Consolidated Financial Statements
 
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 Genworth Financial Mortgage Insurance Pty Limited
Condensed Consolidated Balance Sheets
(U.S. dollar amounts in thousands, except share amounts)
The unaudited interim financial information has not been reviewed by an independent registered
public accounting firm.

 	  	September 30, 2010	 	  	December 31, 2009	 	
 	  	(Unaudited)	 	  	 	 	
Assets	  				  				
Investments:	  				  				
Fixed maturity securities available-for-sale, at fair value	  	$	2,831,077	  	  	$	2,430,035	  	
Short-term investments	  	 	6,281	  	  	 	51,496	  	
	  	 	 	 	  	 	 	 	
Total investments	  	 	2,837,358	  	  	 	2,481,531	  	
	  	 	 	 	  	 	 	 	
Cash and cash equivalents	  	 	149,708	  	  	 	215,278	  	
Accrued investment income	  	 	48,451	  	  	 	34,706	  	
Prepaid reinsurance premiums	  	 	627	  	  	 	639	  	
Deferred acquisition costs	  	 	101,557	  	  	 	92,356	  	
Goodwill	  	 	7,252	  	  	 	6,736	  	
Related party receivables	  	 	16,710	  	  	 	8,082	  	
Other assets	  	 	24,159	  	  	 	29,980	  	
	  	 	 	 	  	 	 	 	
Total assets	  	$	3,185,822	  	  	$	2,869,308	  	
	  	 	 	 	  	 	 	 	
Liabilities and stockholder’s equity	  				  				
Liabilities:	  				  				
Reserve for losses and loss adjustment expenses	  	$	188,399	  	  	$	201,959	  	
Unearned premiums	  	 	1,057,086	  	  	 	1,036,745	  	
Net deferred tax liability	  	 	14,616	  	  	 	4,879	  	
Related party payables	  	 	68,951	  	  	 	39,852	  	
Other liabilities and accrued expenses	  	 	48,231	  	  	 	52,035	  	
	  	 	 	 	  	 	 	 	
Total liabilities	  	 	1,377,283	  	  	 	1,335,470	  	

Stockholder’s equity:	  				  				
Ordinary shares – No par value; 1,401,558,880 and 1,401,558,500 shares authorized and issued as of September 30, 2010 and December 31, 2009, respectively	  	 	—  	  	  	 	—  	  	
Additional paid-in capital	  	 	617,785	  	  	 	610,149	  	

Accumulated other comprehensive income (loss):	  				  				
Net unrealized investment gains (losses):	  				  				
Net unrealized gains (losses) on securities not other-than-temporarily impaired	  	 	19,083	  	  	 	3,627	  	
Net unrealized gains (losses) on other-than-temporarily impaired securities	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	
Net unrealized investment gains (losses)	  	 	19,083	  	  	 	3,627	  	
Foreign currency translation adjustments	  	 	378,225	  	  	 	249,224	  	
	  	 	 	 	  	 	 	 	
Total accumulated other comprehensive income (loss)	  	 	397,308	  	  	 	252,851	  	
Retained earnings	  	 	793,446	  	  	 	670,838	  	
	  	 	 	 	  	 	 	 	
Total stockholder’s equity	  	 	1,808,539	  	  	 	1,533,838	  	
	  	 	 	 	  	 	 	 	
Total liabilities and stockholder’s equity	  	$	3,185,822	  	  	$	2,869,308	  	
	  	 	 	 	  	 	 	 	
See Notes to Condensed Consolidated Financial Statements
 
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 Genworth Financial Mortgage Insurance Pty Limited
Condensed Consolidated Statements of Changes in Stockholder’s Equity
(U.S. dollar amounts in thousands)
The unaudited interim financial information has not been reviewed by an independent registered
public accounting firm.

 	  	Additional
paid-in
capital	 	  	Accumulated
other
comprehensive
income (loss)	 	  	Retained
earnings	 	  	Total
stockholder’s
equity	 	
Balances as of December 31, 2009	  	$	610,149	  	  	$	252,851	  	  	$	670,838	  	  	$	1,533,838	  	
	  				  				  				  	 	 	 	
Comprehensive income (loss):	  				  				  				  				
Net income	  	 	—  	  	  	 	—  	  	  	 	122,608	  	  	 	122,608	  	
Net unrealized gains on investment securities	  	 	—  	  	  	 	15,456	  	  	 	—  	  	  	 	15,456	  	
Foreign currency translation adjustments	  	 	—  	  	  	 	129,001	  	  	 	—  	  	  	 	129,001	  	
	  				  				  				  	 	 	 	
Total comprehensive income (loss)	  				  				  				  	 	267,065	  	
Capital contribution	  	 	7,636	  	  	 	—  	  	  	 	—  	  	  	 	7,636	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Balances as of September 30, 2010	  	$	617,785	  	  	$	397,308	  	  	$	793,446	  	  	$	1,808,539	  	

																	
 	  	Additional
paid-in
capital	 	  	Accumulated
other
comprehensive
income (loss)	 	 	Retained
earnings	 	  	Total
stockholder’s
equity	 	
Balances as of December 31, 2008	  	$	558,925	  	  	$	(44,673	) 	 	$	538,058	  	  	$	1,052,310	  	
	  				  				 				  	 	 	 	
Cumulative effect of change in accounting	  	 	—  	  	  	 	(865	) 	 	 	865	  	  	 	—  	  	
Comprehensive income (loss):	  				  				 				  				
Net income	  	 	—  	  	  	 	—  	  	 	 	90,633	  	  	 	90,633	  	
Net unrealized gains on investment securities	  	 	—  	  	  	 	(18,915	) 	 	 	—  	  	  	 	(18,915	) 	
Foreign currency translation adjustments	  	 	—  	  	  	 	294,041	  	 	 	—  	  	  	 	294,041	  	
	  				  				 				  	 	 	 	
Total comprehensive income (loss)	  				  				 				  	 	365,759	  	
Capital contribution	  	 	35,886	  	  	 	—  	  	 	 	—  	  	  	 	35,886	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Balances as of September 30, 2009	  	$	594,811	  	  	$	229,588	  	 	$	629,556	  	  	$	1,453,955	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
See Notes to Condensed Consolidated Financial Statements
 
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 Genworth Financial Mortgage Insurance Pty Limited
Condensed Consolidated Statements of Cash Flows
(U.S. dollar amounts in thousands)
(Unaudited)
The unaudited interim financial information has not been reviewed by an independent registered
public accounting firm.

 	  	Nine months ended September 30,	 	
 	  	2010	 	 	2009	 	
Cash flows from operating activities:	  				 				
Net income	  	$	122,608	  	 	$	90,633	  	
Adjustments to reconcile net income to net cash from operating activities:	  				 				
Amortization of investment discounts and premiums	  	 	(832	) 	 	 	(1,608	) 	
Net investment (gains) losses	  	 	(505	) 	 	 	(1,687	) 	
Acquisition costs deferred	  	 	(26,898	) 	 	 	(29,282	) 	
Amortization of deferred acquisition costs and intangibles	  	 	27,069	  	 	 	17,766	  	
Deferred income taxes	  	 	(389	) 	 	 	(1,944	) 	
Corporate overhead allocation	  	 	11,635	  	 	 	12,545	  	
Change in certain assets and liabilities:	  				 				
Accrued investment income and other assets	  	 	(18,604	) 	 	 	(19,552	) 	
Reserve for losses and loss adjustment expenses	  	 	(24,672	) 	 	 	6,124	  	
Unearned premiums	  	 	(53,680	) 	 	 	71,747	  	
Other liabilities	  	 	16,579	  	 	 	22,273	  	
	  	 	 	 	 	 	 	 	
Net cash from operating activities	  	 	52,311	  	 	 	167,015	  	

Cash flows from investing activities:	  				 				
Proceeds from maturities and repayments of fixed maturity securities and short-term investments	  	 	782,088	  	 	 	442,606	  	
Purchases of fixed maturity securities and short-term investments	  	 	(915,705	) 	 	 	(731,329	) 	
	  	 	 	 	 	 	 	 	
Net cash from investing activities	  	 	(133,617	) 	 	 	(288,723	) 	
	  	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash and cash equivalents	  	 	15,736	  	 	 	93,120	  	
	  	 	 	 	 	 	 	 	
Net change in cash and cash equivalents	  	 	(65,570	) 	 	 	(28,588	) 	
	  	 	 	 	 	 	 	 	
Cash and cash equivalents at beginning of period	  	 	215,278	  	 	 	408,182	  	
	  	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	  	$	149,708	  	 	$	379,594	  	
	  	 	 	 	 	 	 	 	
See Notes to Condensed Consolidated Financial Statements
 
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Genworth Financial  Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)
(1) Nature of Business, Formation of Genworth Mortgage and Basis of Presentation
Genworth Financial Mortgage Insurance Pty Limited (“Genworth Mortgage” or the “Company” as appropriate) offers mortgage insurance products in Australia and New Zealand and is headquartered in Sydney, Australia. In particular, the Company offers primary mortgage insurance, known as “lenders mortgage insurance,” or LMI, and portfolio credit enhancement policies. The principal product is LMI, which is generally single premium business and provides 100% coverage of the loan amount in the event of a mortgage default.
The Company’s condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and rules and regulations of the U. S. Securities and Exchange Commission (“SEC”) disclosure requirements for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These condensed consolidated financial statements include all adjustments considered necessary by management to present a fair statement of the financial position, results of operations and cash flow for the periods presented. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. The condensed consolidated financial statements included herein should be read in conjunction with the audited financial statements and related notes contained in our 2009 year end financial statements on Form 8-K furnished on March 30, 2010.
The Company’s management has determined that the Company has one reportable operating segment, mortgage insurance.
Genworth Mortgage, formerly GE Mortgage Insurance Company Pty Limited, is a wholly-owned subsidiary of Genworth Financial Mortgage Insurance Holdings Pty Limited and was incorporated in Australia on November 10, 2003. The ultimate parent company of Genworth Mortgage is Genworth Financial, Inc. (“Genworth”). Genworth was incorporated in Delaware on October 23, 2003.
The condensed consolidated financial statements are presented in U.S. dollars. The accompanying financial statements include Genworth Financial Mortgage Indemnity Limited and are prepared on a consolidated basis. All intercompany transactions have been eliminated in the consolidated financial statements. Certain prior year amounts have been reclassified to conform to the current year presentation.
(2) Accounting Pronouncements
Recently Adopted
Scope Exception for Embedded Credit Derivatives
On July 1, 2010, we adopted new accounting guidance related to embedded credit derivatives. This accounting guidance clarified the scope exception for embedded credit derivatives and when those features would be bifurcated from the host contract. Under the new accounting guidance, only embedded credit derivative features that are in the form of subordination of one financial instrument to another would not be subject to the bifurcation requirements. The adoption of this new accounting guidance did not have any impact on our consolidated financial statements
Improvements to Financial Reporting by Enterprises Involved with VIEs
On January 1, 2010, we adopted new accounting guidance for determining which enterprise, if any, has a controlling financial interest in variable interest entities (“VIE”) and requires additional disclosures about involvement in VIEs. Under this new accounting guidance, the primary beneficiary of a VIE is the enterprise that has the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance and has the obligation to absorb losses or receive benefits that could potentially be
 
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Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)
 
significant to the VIE. Upon adoption of this new accounting guidance, we were required to consolidate certain VIEs, if any, including previously qualified special purpose entities and investment structures. The adoption of this accounting guidance did not have any impact on our consolidated financial statements as we do not have any controlling financial interests in a VIE.
Fair Value Measurements and Disclosures - Improving Disclosures about Fair Value Measurements
On January 1, 2010, we adopted new accounting guidance requiring additional disclosures for significant transfers between Level 1 and 2 fair value measurements and clarifications to existing fair value disclosures related to the level of disaggregation, inputs and valuation techniques. The adoption of this new accounting guidance did not have a material impact on our consolidated financial statements.
Not Yet Adopted
In October 2010, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to accounting for costs associated with acquiring or renewing insurance contracts. This new accounting guidance will be effective for us on January 1, 2012. When adopted, we expect to defer fewer costs. The new guidance is required to be adopted prospectively with retroactive adoption allowed. We have not yet determined the method nor impact this accounting guidance will have on our consolidated financial statements.
In July 2010, the FASB issued new accounting guidance that will require additional disclosures about the credit quality of loans, lease receivables and other long-term receivables and the related allowance for credit losses. Certain additional disclosures in this new accounting guidance will be effective for us on December 31, 2010 with certain other additional disclosures that will be effective for us on March 31, 2011. We do not expect the adoption of this new accounting guidance to have a material impact on our consolidated financial statements.
In January 2010, the FASB issued new accounting guidance to require additional disclosures about purchases, sales, issuances, and settlements in the rollforward of Level 3 fair value measurements. This new accounting guidance will be effective for us on January 1, 2011. We do not expect the adoption of this new accounting guidance to have a material impact on our consolidated financial statements.
(3) Investments
Net Investment Income
Sources of net investment income were as follows for the periods indicated:

 	  	Three months ended
September 30,	 	 	Nine months ended
September 30,	 	
					
(U.S. dollar amounts in thousands)	  	2010	 	 	2009	 	 	2010	 	 	2009	 	
Fixed maturity securities	  	$	37,290	  	 	$	31,575	  	 	$	110,507	  	 	$	80,213	  	
					
Cash and cash equivalents	  	 	1,395	  	 	 	2,864	  	 	 	5,446	  	 	 	10,260	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross investment income before expenses and fees	  	 	38,685	  	 	 	34,439	  	 	 	115,953	  	 	 	90,473	  	
Expenses and fees	  	 	(1,153	) 	 	 	(726	) 	 	 	(3,652	) 	 	 	(1,733	) 	

Net investment income	  	$	37,532	  	 	$	33,713	  	 	$	112,301	  	 	$	88,740	  	

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Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)

Net Investment Gains (Losses)
The following table sets forth net investment gains (losses) for the periods indicated:

 	  	Three months  ended
September 30,	 	 	Nine months ended
September 30,	 	
(U.S. dollar amounts in thousands)	  	2010	 	  	2009	 	 	2010	 	 	2009	 	
Available-for-sale investment securities:	  				  				 				 				
Realized gains on sale	  	$	231	  	  	$	2,952	  	 	$	2,146	  	 	$	6,008	  	
Realized losses on sale	  	 	—  	  	  	 	(4,231	) 	 	 	(1,641	) 	 	 	(4,321	) 	
Impairments:	  				  				 				 				
Total other-than-temporary impairments	  	 	—  	  	  	 	—  	  	 	 	—  	  	 	 	—  	  	
Portion of other-than-temporary impairments included in other comprehensive income (loss) (“OCI”)	  	 	—  	  	  	 	—  	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Net other-than-temporary impairments	  	 	—  	  	  	 	—  	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Net investment gains (losses)	  	$	231	  	  	$	(1,279	) 	 	$	505	  	 	$	1,687	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
There were no securities sold at a loss during the three months ended September 30, 2010. The aggregate fair value of securities sold at a loss during the three months ended September 30, 2009 was $19,446 thousands, which was approximately 82% of book value. The aggregate fair value of securities sold at a loss during the nine months ended September 30, 2010 and 2009 was $226,392 thousands and $22,556 thousands, respectively, which was approximately 99% and 84%, respectively, of book value.
 
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Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)

Unrealized Investment Gains (Losses)
Net unrealized gains and losses on available-for-sale investment securities reflected as a separate component of accumulated other comprehensive income (loss) were as follows as of the dates indicated:

(U.S. dollar amounts in thousands)	  	September 30,
2010	 	 	December 31,
2009	 	
Net unrealized gains (losses) on available-for-sale investment securities:	  				 				
Fixed maturity securities	  	$	27,261	  	 	$	5,181	  	
Deferred income taxes	  	 	(8,178	) 	 	 	(1,554	) 	
	  	 	 	 	 	 	 	 	
Net unrealized investment gains (losses)	  	$	19,083	  	 	$	3,627	  	
	  	 	 	 	 	 	 	 	
The change in net unrealized gains (losses) on available-for-sale securities reported in accumulated other comprehensive income (loss) was as follows as of or for the periods indicated:

 	  	As of or for the three months ended September  30,	 	
(U.S. dollar amounts in thousands)	  	2010	 	 	2009	 	
Beginning balance	  	$	27,321	  	 	$	4,565	  	
Unrealized gains (losses) arising during the period:	  				 				
Unrealized gains (losses) on investment securities	  	 	(11,538	) 	 	 	2,336	  	
Provision for deferred taxes	  	 	3,462	  	 	 	(704	) 	
	  	 	 	 	 	 	 	 	
Change in unrealized investment gains (losses)	  	 	(8,076	) 	 	 	1,632	  	
Reclassification adjustments to net investment (gains) losses, net of taxes of $69 and $(384)	  	 	(162	) 	 	 	895	  	
	  	 	 	 	 	 	 	 	
Ending balance	  	$	19,083	  	 	$	7,092	  	
	  	 	 	 	 	 	 	 	
The change in net unrealized gains (losses) on available-for-sale securities reported in accumulated other comprehensive income (loss) was as follows as of or for the periods indicated:

 	  	As of or for the nine months ended September  30,	 	
(U.S. dollar amounts in thousands)	  	2010	 	 	2009	 	
Beginning balance	  	$	3,627	  	 	$	26,872	  	
Cumulative effect of change in accounting	  	 	—  	  	 	 	(865	) 	
Unrealized gains (losses) arising during the period:	  				 				
Unrealized gains (losses) on investment securities	  	 	22,585	  	 	 	(25,702	) 	
Provision for deferred taxes	  	 	(6,776	) 	 	 	7,968	  	
	  	 	 	 	 	 	 	 	
Change in unrealized investment gains (losses)	  	 	15,809	  	 	 	(17,734	) 	
Reclassification adjustments to net investment (gains) losses, net of taxes of $152 and $506	  	 	(353	) 	 	 	(1,181	) 	
	  	 	 	 	 	 	 	 	
Ending balance	  	$	19,083	  	 	$	7,092	  	

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Table of Contents
Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)

Fixed Maturity Securities
As of September 30, 2010, the amortized cost or cost, gross unrealized gains and losses and fair value of the fixed maturity securities classified as available-for-sale were as follows:

 	  	 	 	  	Gross unrealized gains on securities	 	  	Gross unrealized losses on securities	 	  	 	 	
(U.S. dollar amounts in thousands)	  	Amortized
cost or
cost	 	  	Not other-than-
temporarily
impaired	 	  	Other-than-
temporarily
impaired	 	  	Not other-than-
temporarily
impaired	 	 	Other-than-
temporarily
impaired	 	  	Fair
value	 	
Fixed maturity securities:	  				  				  				  				 				  				
Government—non-U.S.	  	$	361,995	  	  	$	5,250	  	  	$	—  	  	  	$	(396	) 	 	$	—  	  	  	$	366,849	  	
Corporate—U.S.	  	 	48,415	  	  	 	190	  	  	 	—  	  	  	 	(234	) 	 	 	—  	  	  	 	48,371	  	
Corporate—non-U.S.	  	 	2,344,306	  	  	 	33,662	  	  	 	—  	  	  	 	(9,071	) 	 	 	—  	  	  	 	2,368,897	  	
Residential mortgage-backed securities	  	 	46,960	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	46,960	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total available-for-sale securities	  	$	2,801,676	  	  	$	39,102	  	  	$	—  	  	  	$	(9,701	) 	 	$	—  	  	  	$	2,831,077	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
As of December 31, 2009, the amortized cost or cost, gross unrealized gains and losses and fair value of the fixed maturity securities classified as available-for-sale were as follows:

 	  	 	 	  	Gross unrealized gains on securities	 	  	Gross unrealized losses on securities	 	  	 	 	
(U.S. dollar amounts in thousands)	  	Amortized
cost or
cost	 	  	Not other-than-
temporarily
impaired	 	  	Other-than-
temporarily
impaired	 	  	Not other-than-
temporarily
impaired	 	 	Other-than-
temporarily
impaired	 	  	Fair
value	 	
Fixed maturity securities:	  				  				  				  				 				  				
Government—non-U.S.	  	$	272,595	  	  	$	2,469	  	  	$	—  	  	  	$	(2,173	) 	 	$	—  	  	  	$	272,891	  	
Corporate—U.S.	  	 	121,390	  	  	 	415	  	  	 	—  	  	  	 	(466	) 	 	 	—  	  	  	 	121,339	  	
Corporate—non-U.S.	  	 	2,030,869	  	  	 	20,826	  	  	 	—  	  	  	 	(15,890	) 	 	 	—  	  	  	 	2,035,805	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total available-for-sale securities	  	$	2,424,854	  	  	$	23,710	  	  	$	—  	  	  	$	(18,529	) 	 	$	—  	  	  	$	2,430,035	  	

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Table of Contents
Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)

The following table presents the gross unrealized losses and fair values of investment securities, aggregated by investment type and length of time that individual investment securities have been in a continuous unrealized loss position, as of September 30, 2010:

 	  	Less than 12 months	 	  	12 months or more	 	
(U.S. dollar amounts in thousands)	  	Fair
value	 	  	Gross
unrealized
losses	 	 	Number of
securities	 	  	Fair
value	 	  	Gross
unrealized
losses	 	 	Number of
securities	 	
Description of Securities	  				  				 				  				  				 				
Fixed maturity securities:	  				  				 				  				  				 				
Government—non-U.S.	  	$	73,308	  	  	$	(396	) 	 	 	6	  	  	$	—  	  	  	$	—  	  	 	 	—  	  	
Corporate—U.S.	  	 	15,876	  	  	 	(34	) 	 	 	4	  	  	 	11,407	  	  	 	(200	) 	 	 	1	  	
Corporate—non-U.S.	  	 	429,272	  	  	 	(4,502	) 	 	 	42	  	  	 	270,951	  	  	 	(4,569	) 	 	 	20	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total for securities in an unrealized loss position	  	$	518,456	  	  	$	(4,932	) 	 	 	52	  	  	$	282,358	  	  	$	(4,769	) 	 	 	21	  	

% Below cost—fixed maturity securities:	  				  				 				  				  				 				
<20% Below cost	  	$	518,456	  	  	$	(4,932	) 	 	 	52	  	  	$	282,358	  	  	$	(4,769	) 	 	 	21	  	
20-50% Below cost	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	
>50% Below cost	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total for securities in an unrealized loss position	  	$	518,456	  	  	$	(4,932	) 	 	 	52	  	  	$	282,358	  	  	$	(4,769	) 	 	 	21	  	

Investment grade	  	$	516,944	  	  	$	(4,926	) 	 	 	51	  	  	$	282,358	  	  	$	(4,769	) 	 	 	21	  	
Below investment grade	  	 	1,512	  	  	 	(6	) 	 	 	1	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total for securities in an unrealized loss position	  	$	518,456	  	  	$	(4,932	) 	 	 	52	  	  	$	282,358	  	  	$	(4,769	) 	 	 	21	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
The investment securities in an unrealized loss position as of September 30, 2010 consisted of 73 securities and accounted for unrealized losses of $9,701 thousands. Of these unrealized losses of $9,701 thousands, nearly all of the securities were investment grade (rated “AAA” through “BBB-”) and all were less than 20% below cost. The securities less than 20% below cost were primarily attributable to widening credit spreads which reflect current financial industry events including uncertainty surrounding the level and type of government support of European financial institutions, potential capital restructuring of these institutions, the risk that income payments may be deferred and the risk that these institutions could be nationalized. In our examination of these securities, we considered all available evidence, including the issuers’ financial condition and current industry events to develop our conclusion on the amount and timing of the cash flows expected to be collected. Based on this evaluation, we determined that the unrealized losses on these securities represented temporary impairments as of September 30, 2010.
Despite the considerable analysis and rigor employed on our structured securities, it is at least reasonably possible that the underlying collateral of these investments will perform worse than current market expectations. Such events may lead to adverse changes in cash flows on our holdings and potential future write-downs within our portfolio. We expect our investments in corporate securities will continue to perform in accordance with our conclusions about the amount and timing of estimated cash flows. Although we do not anticipate such events, it is at least reasonably possible that issuers of our investments in corporate securities will perform worse than current expectations. Such events may lead us to recognize potential future write-downs within our portfolio of corporate securities.
 
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Table of Contents
Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)

The following table presents the gross unrealized losses and fair values of investment securities, aggregated by investment type and length of time that individual investment securities were in a continuous unrealized loss position, as of December 31, 2009:

 	  	Less than 12 months	 	  	12 months or more	 	
(U.S. dollar amounts in thousands)	  	Fair
value	 	  	Gross
unrealized
losses	 	 	Number of
securities	 	  	Fair
value	 	  	Gross
unrealized
losses	 	 	Number of
securities	 	
Description of Securities	  				  				 				  				  				 				
Fixed maturity securities:	  				  				 				  				  				 				
							
Government—non-U.S.	  	$	137,755	  	  	$	(2,173	) 	 	 	7	  	  	$	—  	  	  	$	—  	  	 	 	—  	  	
Corporate—U.S.	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	21,937	  	  	 	(466	) 	 	 	4	  	
Corporate—non-U.S.	  	 	777,557	  	  	 	(13,441	) 	 	 	59	  	  	 	75,754	  	  	 	(2,449	) 	 	 	15	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total for securities in an unrealized loss position	  	$	915,312	  	  	$	(15,614	) 	 	 	66	  	  	$	97,691	  	  	$	(2,915	) 	 	 	19	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
% Below cost—fixed maturity securities:	  				  				 				  				  				 				
<20% Below cost	  	$	915,312	  	  	$	(15,614	) 	 	 	66	  	  	$	97,691	  	  	$	(2,915	) 	 	 	19	  	
20-50% Below cost	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	
>50% Below cost	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total for securities in an unrealized loss position	  	$	915,312	  	  	$	(15,614	) 	 	 	66	  	  	$	97,691	  	  	$	(2,915	) 	 	 	19	  	

Investment grade	  	$	915,312	  	  	$	(15,614	) 	 	 	66	  	  	$	97,691	  	  	$	(2,915	) 	 	 	19	  	
Below investment grade	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total for securities in an unrealized loss position	  	$	915,312	  	  	$	(15,614	) 	 	 	66	  	  	$	97,691	  	  	$	(2,915	) 	 	 	19	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
The scheduled maturity distribution of fixed maturity securities as of September 30, 2010 is set forth below. Actual maturities may differ from contractual maturities because issuers of securities may have the right to call or prepay obligations with or without call or prepayment penalties .

(U.S. dollar amounts in thousands)	  	Amortized
cost or
cost	 	  	Fair
value	 	
Due one year or less	  	$	314,947	  	  	$	315,488	  	
Due after one year through five years	  	 	1,893,684	  	  	 	1,908,769	  	
Due after five years through ten years	  	 	501,082	  	  	 	513,575	  	
Due after ten years	  	 	45,003	  	  	 	46,285	  	
	  	 	 	 	  	 	 	 	
Subtotal	  	 	2,754,716	  	  	 	2,784,117	  	
Residential mortgage-backed securities	  	 	46,960	  	  	 	46,960	  	
	  	 	 	 	  	 	 	 	
Total	  	$	2,801,676	  	  	$	2,831,077	  	
	  	 	 	 	  	 	 	 	
As of September 30, 2010, $81 million of investments were subject to certain call provisions. Typically, call provisions provide the issuer the ability to redeem a security, prior to its stated maturity, at or above par.
Investment Concentrations
As of September 30, 2010, securities issued by finance and insurance industry groups and foreign state government represented approximately 20% and 41%, respectively, of the corporate fixed maturity securities portfolio held by the Company.
As of September 30, 2010, the Company held $431 million in corporate fixed maturity securities issued by the New South Wales Treasury Corporation, which comprised of 24% of total stockholder’s
 
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Table of Contents
Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)
 
equity. Additionally, the Company held $359 million in corporate fixed maturity securities issued by Queensland Treasury Corporation, $221 million in corporate fixed maturity securities issued by the State of Victoria and $193 million in corporate fixed maturity securities issued by National Australia Bank Limited, which comprised 20%, 12% and 11%, respectively, of total stockholder’s equity. No other single issuer exceeded 10% of total stockholder’s equity.
(4) Fair Value Measurements
Recurring Fair Value Measurements
We have fixed maturity securities which are carried at fair value. Below is a description of the valuation techniques and inputs used to determine fair value by class of instrument.
Fixed maturity securities
The valuations of fixed maturity securities are determined using a market approach, income approach or a combination of the market and income approach depending on the type of instrument and availability of information.
We utilize certain third-party data providers when determining fair value. We consider information obtained from third-party pricing services as well as third-party broker provided prices, or broker quotes, in our determination of fair value. Additionally, we utilize internal models to determine the valuation of securities using an income approach where the inputs are based on third-party provided market inputs. While we consider the valuations provided by third-party pricing services and broker quotes, management determines the fair value of our investment securities after considering all relevant and available information. We also obtain an understanding of the valuation methodologies and procedures used by third-party data providers to ensure sufficient understanding to evaluate the valuation data received and determine the appropriate fair value.
In general, we first obtain valuations from pricing services. If a price is not supplied by a pricing service, we will typically seek a broker quote. For certain private fixed maturity securities where we do not obtain valuations from pricing services, we utilize an internal model to determine fair value since transactions for identical securities are not readily observable and these securities are not typically valued by pricing services. For all securities, excluding certain private fixed maturity securities, if neither a pricing service nor broker quote valuation is available, we determine fair value using internal models.
For pricing services, we obtain an understanding of the pricing methodologies and procedures for each type of instrument. In general, a pricing service does not provide a price for a security if sufficient information is not readily available to determine fair value or if such security is not in the specific sector or class covered by a particular pricing service. Given our understanding of the pricing methodologies and procedures of pricing services, the securities valued by pricing services are typically classified as Level 2 unless we determine the valuation process for a security or group of securities utilizes significant unobservable inputs.
For private fixed maturity securities, we utilize an internal model to determine fair value and utilize public bond spreads by sector, rating and maturity to develop the market rate that would be utilized for a similar public bond. We then add an additional premium to the public bond spread to adjust for the liquidity and other features of our private placements. We utilize the estimated market yield to discount the expected cash flows of the security to determine fair value. We assign each security an internal rating to determine appropriate public bond spread that should be utilized in the valuation. While we generally consider the public bond spreads by sector and maturity to be observable inputs, we evaluate the similarities of our private placement with the public bonds to determine whether the spreads utilized would be considered observable inputs for the private placement being valued. To determine the significance of unobservable inputs, we calculate the impact on the valuation from the unobservable input and will classify a security as Level 3 when the impact on the valuation exceeds 10%.
For remaining securities priced using internal models, we maximize the use of observable inputs but typically utilize significant unobservable inputs to determine fair value. Accordingly, the valuations are typically classified as Level 3.
 
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Table of Contents
Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)

The following table summarizes the primary sources considered when determining fair value of each class of fixed maturity securities as of September 30, 2010.

(U.S. dollar amounts in thousands)	  	Total	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
Government—non-U.S.:	  				  				  				  				
Pricing services	  	$	366,057	  	  	$	—  	  	  	$	366,057	  	  	$	—  	  	
Internal models	  	 	792	  	  	 	—  	  	  	 	—  	  	  	 	792	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total government—non-U.S.	  	 	366,849	  	  	 	—  	  	  	 	366,057	  	  	 	792	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Corporate—U.S.:	  				  				  				  				
Pricing services	  	 	48,371	  	  	 	—  	  	  	 	48,371	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total U.S. corporate	  	 	48,371	  	  	 	—  	  	  	 	48,371	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Corporate—non-U.S.:	  				  				  				  				
Pricing services	  	 	2,368,897	  	  	 	—  	  	  	 	2,368,897	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total corporate—non-U.S.	  	 	2,368,897	  	  	 	—  	  	  	 	2,368,897	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Residential mortgage-backed securities:	  				  				  				  				
Internal models	  	 	46,960	  	  	 	—  	  	  	 	—  	  	  	 	46,960	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total residential mortgage-backed securities	  	 	46,960	  	  	 	—  	  	  	 	—  	  	  	 	46,960	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturity securities	  	$	2,831,077	  	  	$	—  	  	  	$	2,783,325	  	  	$	47,752	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The following tables set forth our assets that are measured at fair value on a recurring basis as of the dates indicated:

 	  	September 30, 2010	 	
(U.S. dollar amounts in thousands)	  	Total	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
Assets	  				  				  				  				
Investments:	  				  				  				  				
Fixed maturity securities:	  				  				  				  				
Government—non-U.S.	  	$	366,849	  	  	$	—  	  	  	$	366,057	  	  	$	792	  	
Corporate—U.S.	  	 	48,371	  	  	 	—  	  	  	 	48,371	  	  	 	—  	  	
Corporate—non-U.S.	  	 	2,368,897	  	  	 	—  	  	  	 	2,368,897	  	  	 	—  	  	
Residential mortgage-backed securities	  	 	46,960	  	  	 	—  	  	  	 	—  	  	  	 	46,960	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturity securities	  	$	2,831,077	  	  	$	—  	  	  	$	2,783,325	  	  	$	47,752	  	

 	  	December 31, 2009	 	
(U.S. dollar amounts in thousands)	  	Total	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
Assets	  				  				  				  				
Investments:	  				  				  				  				
Fixed maturity securities:	  				  				  				  				
Government—non-U.S.	  	$	272,891	  	  	$	—  	  	  	$	272,113	  	  	$	778	  	
Corporate—U.S.	  	 	121,339	  	  	 	—  	  	  	 	121,339	  	  	 	—  	  	
Corporate—non-U.S.	  	 	2,035,805	  	  	 	—  	  	  	 	2,034,443	  	  	 	1,362	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total fixed maturity securities	  	$	2,430,035	  	  	$	—  	  	  	$	2,427,895	  	  	$	2,140	  	

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Table of Contents
Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)

The following tables present additional information about assets measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value as of or for the dates indicated:

 	  	 	 	  	Total realized and
unrealized gains
(losses)	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
(U.S. dollar amounts in thousands)	  	Beginning
balance
as of
July 1,
2010	 	  	Included in
net income	 	  	Included
in OCI	 	  	Purchases, sales
issuances and
settlements, net	 	  	Transfer
in Level  3 (1) 	 	  	Transfer
out of
Level 3	 	  	Ending
balance
as of
September 30,
2010	 	  	Total gains
(losses)
included in
net income
attributable
to assets
still held	 	
Fixed maturity securities:	  				  				  				  				  				  				  				  				
Government—non-U.S.	  	$	740	  	  	$	—  	  	  	$	52	  	  	$	—  	  	  	$	—  	  	  	$	—  	  	  	$	792	  	  	$	—  	  	
Corporate—non-U.S.	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
Residential mortgage-backed securities	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	46,960	  	  	 	—  	  	  	 	46,960	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total Level 3 assets	  	$	740	  	  	$	—  	  	  	$	52	  	  	$	—  	  	  	$	46,960	  	  	$	—  	  	  	$	47,752	  	  	$	—  	  	

(1)	The transfer in of Level 3 was primarily related to residential mortgage-backed securities and resulted from a change in the observability of inputs used to determine fair value.	

 	  	 	 	  	Total realized and
unrealized gains
(losses)	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
(U.S. dollar amounts in thousands)	  	Beginning
balance
as of
July 1,
2009	 	  	Included in
net income	 	  	Included
in OCI	 	  	Purchases, sales
issuances and
settlements, net	 	  	Transfer
in Level 3	 	  	Transfer
out of
Level 3	 	  	Ending
balance
as of
September 30,
2009	 	  	Total gains
(losses)
included in
net income
attributable
to assets
still held	 	
Fixed maturity securities:	  				  				  				  				  				  				  				  				
Government—non-U.S.	  	$	—  	  	  	$	—  	  	  	$	92	  	  	$	—  	  	  	$	685	  	  	$	—  	  	  	$	777	  	  	$	—  	  	
Corporate—non-U.S.	  	 	4,557	  	  	 	4	  	  	 	373	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	4,934	  	  	 	4	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total Level 3 assets	  	$	4,557	  	  	$	4	  	  	$	465	  	  	$	—  	  	  	$	685	  	  	$	—  	  	  	$	5,711	  	  	$	4	  	

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Table of Contents
Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)

																																	
 	  	 	 	  	Total realized and
unrealized gains
(losses)	 	  	 	 	  	 	 	  	 	 	 	 	 	  	 	 	
(U.S. dollar amounts in thousands)	  	Beginning
balance
as of
January 1,
2010	 	  	Included in
net income	 	  	Included
in OCI	 	  	Purchases, sales
issuances and
settlements, net	 	  	Transfer
in Level  3 (1) 	 	  	Transfer
out of
Level 3 (2) 	 	 	Ending
balance as of
September 30,
2010	 	  	Total gains
(losses)
included in
net income
attributable
to assets
still held	 	
Fixed maturity securities:	  				  				  				  				  				  				 				  				
Government—non-U.S.	  	$	778	  	  	$	—  	  	  	$	14	  	  	$	—  	  	  	$	—  	  	  	$	—  	  	 	$	792	  	  	$	—  	  	
Corporate—non-U.S.	  	 	1,362	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	(1,362	) 	 	 	—  	  	  	 	—  	  	
Residential mortgage-backed securities	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	44,516	  	  	 	46,960	  	  	 	(44,516	) 	 	 	46,960	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total Level 3 assets	  	$	2,140	  	  	$	—  	  	  	$	14	  	  	$	44,516	  	  	$	46,960	  	  	$	(45,878	) 	 	$	47,752	  	  	$	—  	  	

(1)	The transfer in of Level 3 was primarily related to residential mortgage-backed securities and resulted from a change in the observability of inputs used to determine fair value.	
(2)	The transfer out of Level 3 was primarily related to residential mortgage-backed securities and private fixed corporate—non U.S. securities and resulted from a change in the observability of inputs used to determine fair value.	

 	  	 	 	  	Total realized and
unrealized gains
(losses)	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
(U.S. dollar amounts in thousands)	  	Beginning
balance
as of
January 1,
2009	 	  	Included in
net income	 	  	Included
in OCI	 	  	Purchases, sales
issuances and
settlements, net	 	  	Transfer
in Level 3	 	  	Transfer
out of
Level 3	 	  	Ending
balance as of
September 30,
2009	 	  	Total gains
(losses)
included in
net income
attributable
to assets
still held	 	
Fixed maturity securities:	  				  				  				  				  				  				  				  				
Government—non-U.S.	  	$	—  	  	  	$	—  	  	  	$	92	  	  	$	—  	  	  	$	685	  	  	$	—  	  	  	$	777	  	  	$	—  	  	
Corporate—non-U.S.	  	 	4,055	  	  	 	617	  	  	 	262	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	4,934	  	  	 	617	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total Level 3 assets	  	$	4,055	  	  	$	617	  	  	$	354	  	  	$	—  	  	  	$	685	  	  	$	—  	  	  	$	5,711	  	  	$	617	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Realized and unrealized gains (losses) on Level 3 assets and liabilities are primarily reported in either net investment gains (losses) within the condensed consolidated statements of income or OCI within stockholder’s equity based on the appropriate accounting treatment for the instrument.
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity consists of purchases and sales of fixed maturity securities.
The amount presented for unrealized gains (losses) for assets still held as of the reporting date primarily represents accretion on certain fixed maturity securities which were recorded in net investment gains (losses).
 
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Table of Contents
Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)

(5) Supplemental Cash Flow Information
A tax sharing liability of $36 million payable to its immediate parent company Genworth Financial Mortgage Insurance Holdings Pty Limited was treated as additional contribution of capital.
(6) Securitization Entities
Part of the Company’s product offering includes portfolio credit enhancement policies to Australian regulated lenders that have originated housing loans for securitization in the Australian, European and U.S. markets. Portfolio mortgage insurance serves as an important form of credit enhancement for the Australian securitization market and the Company’s portfolio credit enhancement coverage is generally purchased for low loan-to-value, seasoned loans written by regulated institutions.
As of September 30, 2010 and December 31, 2009, the Company had a maximum exposure to loss from the provision of portfolio credit enhancement to securitization trusts sponsored by third parties of $176 million and $177 million, respectively. The exchange rate for calculating the maximum exposure to loss of translating the Australian dollar into the U.S. dollar as of September 30, 2010 and December 31, 2009 was $0.97 and $0.90, respectively. This exposure was calculated based on the expectation of a 1 in 250 year event. The Company has applied the Australian Prudential Regulation Authority (“APRA”) stress scenario to calculate this exposure. The Company holds sufficient capital resources to meet this obligation were it to occur.
(7) Statutory Accounting
Genworth Mortgage prepares financial statements for its regulator, APRA, in accordance with the accounting practices prescribed by the regulator, which is a comprehensive basis of accounting other than U.S. GAAP.
On June 23, 2010, APRA issued new reporting standards aimed at harmonizing APRA prudential reporting with financial reporting prepared under Australian accounting standards with the effective date of July 1, 2010.
Prior to the new reporting standards, the main differences were as follows:
 
 	•	 	Premium is recognized on a cash receipts basis.	
 
 	•	 	Deferred acquisition costs are not recognized.	
 
 	•	 	A premium liability is recognized representing the unexpired risk portion of insurance policies written. The premium liability is valued as the present value of the expected future claim payments.	
 
 	•	 	Loss and loss adjustment expense reserves include a risk margin and are discounted to present value.	
Under the new rule, the above differences were eliminated and the balance sheet is recorded under Australian accounting standards and a prudential adjustment is made to derive the capital base.
The Company’s APRA net income after tax, capital base, minimum capital requirement and solvency ratio were as follows as of and for the year ended December 31:

(U.S. dollar amounts in thousands)	  	2009	 	
APRA net income after tax	  	$	132,449	  	
	  	 	 	 	
APRA capital base	  	$	1,794,029	  	
APRA minimum capital requirement	  	$	1,368,170	  	
APRA solvency ratio	  	 	1.31	  	
The APRA solvency ratio is the combined amounts of Genworth Financial Mortgage Insurance Pty Limited and its wholly-owned subsidiary, Genworth Financial Mortgage Indemnity Limited.
 
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Table of Contents
Genworth Financial Mortgage Insurance Pty Limited
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2010 and 2009
(Unaudited)

Under the prudential regulation framework in Australia, mortgage insurers are required to establish a catastrophic risk charge defined as a 1 in 250 year event. The Company is required to maintain adequate capital to fund this charge, in addition to normal insurance liabilities, by ensuring that its capital base exceeds its minimum capital requirement at all times.
As of September 30, 2010, the APRA solvency ratio was 1.57.
The Company’s ability to pay dividends to Genworth Financial Mortgage Insurance Holdings Pty Limited is restricted to the extent the payment of dividends exceeds current year income. Any dividend above this level requires prior approval from APRA. In addition, any dividend payment must result in the Company continuing to meet the APRA minimum capital requirement.
 
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